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July 16, 2008
Art Auctions on Cruise Ships Lead to Anger, Accusations and Lawsuits
Published: July 16, 2008

When most people think of art auctions, they think of Christie’s or Sotheby’s in New York or London, not a cruise ship. But over the last two decades, auctioning “fine art” on cruises, often to first-time bidders who have never met a reserve or inspected a provenance, has become big business.

The biggest player by far, with more than $300 million in annual revenue and nearly 300,000 artworks sold each year, is Park West Gallery, based in Southfield, Mich. It handles such a high volume of art sales at sea that it bills itself as “the world’s largest art dealer.”

Park West sells art on the Royal Caribbean, Celebrity, Norwegian, Carnival, Disney, Holland America, Regent and Oceania lines. (Princess runs its own auctions in-house.)

For the cruise-ship companies, Park West’s auctions have become a revenue source like any other concession. For the passengers the auctions are a popular form of onboard entertainment, like gambling or shopping or catching the shows.

Yet some Park West customers say they did not get what they bargained for.

One is Luis Maldonado, a businessman from the La Jolla section of San Diego with interests in finance and construction and a penchant for Latin American art. He was touring the Mediterranean with his wife, Karina, on the Regent Seven Seas Voyager in November 2006 when they decided to stop by the Park West art auction promoted onboard.

He was surprised to find artworks by Picasso and Rembrandt in the auction area, a lounge near the casino, where they were greeted with Champagne. He gravitated toward the Picassos.

There, he said, the auctioneer talked up two “museum-quality” Picasso prints appraised at more than $35,000 each and a trilogy of Salvador Dalí prints valued at $35,000 as a set. Mr. Maldonado said the auctioneer described the works as “good investments,” explaining that they were being offered at 40 percent off their “appraised value,” with no sales tax.

When he asked about the nature of Park West, he said he was told it was on par with Christie’s and Sotheby’s.

It was easy to make the leap. After all, he thought, it was a prestigious cruise, and he had gotten discounts on good wines onboard before. He started bidding, with little competition from the room, and stopped at several thousand dollars below Park West’s appraised value on each. He received an invoice marked “All sales are final.”

It was only after Mr. Maldonado landed back in California that he did some research on his purchases. Including the buyer’s premium, he had paid $24,265 for a 1964 “Clown” print by Picasso. He found that Sotheby’s had sold the exact same print (also numbered 132 of 200) in London for about $6,150 in 2004.

In addition, he had paid $31,110 for a 1968 print, “Le Clown” by Picasso;, an online art database, showed it going for about $5,000.

Perhaps most disturbing, he learned from The Official Catalog of the Graphic Works of Salvador Dalí, by the Dalí archivist Albert Field, that the pencil signatures on Mr. Maldonado’s prints from Dalí’s “Divine Comedy” series (prints without a signature in the woodblock itself) put them in Mr. Field’s column of “unacceptable” prints.

“Since Dalí did not sign any of these prints in black pencil, a pencil signature on one must be a forgery,” Mr. Field wrote.

“It was very upsetting,” Mr. Maldonado said. “I’m not mad about spending $73,000. I’m mad about spending $73,000 for works that I was told are worth more than $100,000 and are probably worth $10,000, if they’re even real.”

He said he contacted Park West “dozens” of times requesting a refund, beginning in early 2007 with multiple e-mail messages to the auctioneer, who responded that all sales were final. More recently, he has pressed Park West’s customer service department for a full refund, without success.

Reached by phone in Michigan, Albert Scaglione, the founder of Park West, said he stood by the company’s certificates of authenticity and its appraisals. “I am absolutely confident that if we had the opportunity to give Mr. Maldonado the history of our pricing, he would have a different view,” Mr. Scaglione said on Monday.

But about two hours after The New York Times asked Mr. Scaglione about Mr. Maldonado’s case, Park West phoned Mr. Maldonado to offer him a full refund.

It may take more effort to satisfy other customers. In April a Florida resident and a California resident filed class action lawsuits against Park West that could potentially cover tens of thousands of residents of those states.

They have accused the company of misrepresenting the value of its artwork and are seeking unspecified damages for unfair trade practices, breach of contract and unjust enrichment.

Appraisals in Question

While overcharging for a product is not in itself illegal, misrepresenting the goods sold can be. The plaintiffs’ central argument hinges on Park West’s description of its appraisals.

On the back of Park West invoices, issued on the ship, the appraised value is described as “the price a client would have to pay to replace the work through a reputable retail art gallery.” Yet on the Park West appraisals themselves, shipped to buyers along with their artwork, the appraised value refers to the “current Park West Gallery retail replacement price.”

A lawyer for the plaintiffs in both states, Shawn Khorrami in Los Angeles, said there was a big difference between the two. “It’s the difference between saying, ‘My house is worth $50 million because that’s what the market would pay for it,’ and, ‘My house is worth $50 million because I say so,” he said.

But a lawyer for Park West, Robert Burlington of Miami, emphasized that the courts have not yet certified the proposed classes in the suits and might not ever do so. He mentioned a 2001 complaint filed in New Jersey against Park West, accusing it of chandelier bidding (the art market term for plucking a bid from thin air), that was kicked around the courts for years before the class was denied certification, partly because the purchases at issue took place at sea.

As for sales pitches by auctioneers, Mr. Burlington pointed to language in the invoice saying that “no verbal agreements or representations shall be of any force of effect unless set forth in writing in this invoice.”

Mr. Scaglione called the class action suits groundless. “We’ve got over a million clients and we make an effort to satisfy every one of them,” he said. “Sometimes you have disingenuous people who buy things for not good reasons, and we get set up.”

“With our size, it’s unfortunate we’ve now become a target,” he added.

Still, other Park West customers who are not involved in the class action suits have made similar allegations of misrepresentation of value.

Dr. Venkatraman Srinivasan, a Pittsburgh cardiologist, has published an account of his experience with Park West at the Web site He said he paid around $30,000 for “Better World,” by Peter Max, while on a Celebrity cruise from Vancouver, British Columbia, to Anchorage last August.

According to his account, he was told that it was an “original” painting worth about $50,000 and was dismayed to discover, when back on terra firma, that variations from the same series were priced as low as $3,000 or $4,000. (Dr. Srinivasan declined to be interviewed for this article because of a confidentiality agreement he signed to obtain a refund from Park West.)

Debra and Timothy Vruble, a couple from Elgin, Ill., who both work in manufacturing engineering, took a Royal Caribbean cruise to the Bahamas in October 2006. Onboard they bought a set of three “Divine Comedy” prints by Dalí from Park West for $19,468.

An Auctioneer’s Advice

“The auctioneer told us we could walk off the boat and sell them for 20 percent more, and they would go up 20 percent a year,” Mrs. Vruble said. Back home, an outside appraisal for the resale value of one of the three prints came in at $850 to $1,000.

Mrs. Vruble said she had gone to great lengths to obtain a refund over the last 18 months, making “dozens of calls” and writing “several letters” to Park West customer service representatives and managers.

Asked on Monday about her complaint, Mr. Scaglione said that any auctioneer who said such things “would be an auctioneer with us no longer.” Later that afternoon Mrs. Vruble said she received a call “out of the blue” from Mr. Shapiro, Park West’s gallery director, offering a refund. (She got the call about a refund five minutes after Mr. Maldonado did; Mr. Shapiro confirmed later by e-mail that a “refund is in process and will be issued upon receipt of release.”)

Both the Vrubles and Dr. Srinivasan pointed to atypical elements of the auction process, like placing stickers on artwork of interest to them before the auction or negotiating a sales price with the auctioneer before bidding.

Along with nearly 100 other disgruntled Park West customers, Dr. Srinivasan and the Vrubles both turned for help to the Fine Art Registry Web site, based in Phoenix.

For a $10 annual membership fee, Fine Art Registry offers subscribers a system for tagging and registering artworks so they can be tracked over the years. It has also made it a mission to publish “buyer beware” articles on collecting — many of which focus on Park West.

The site’s founder, Theresa Franks, first commissioned an article for her site about art auctions at sea in April 2007 after an investigative newspaper article on Park West in The Arizona Republic. She has since fielded 45 complaints from passengers about Park West’s sales of Dalí artwork and 50 more about other purchases from Park West.

A common complaint, she said, is that the rarity or value of an artwork has been misrepresented. “If you’re paying for a Mercedes, you should get a Mercedes, not a ’65 Volkswagen,” she said.

A former paralegal, Ms. Franks tracks the customers’ complaints and provides basic advice to members on getting refunds. (Mainly, she said, we tell them “not to give up.”)

She described the Park West buyers as “newbies,” inexperienced in the art market, let alone the prints market, with its profusion of technology and terminology. Few of the buyers were aware, for instance, that forged Dalí prints flooded the market in the 1970s, she said.

Attracted by Famous Names

“When they hear the names Picasso, Rembrandt, Dalí, they recognize them,” she said. “It’s easy to fall into that trap.” And, she added, it is not easy for these vacationers to do due diligence on the cruise, where phone calls can be very expensive and Internet access very slow.

Park West’s response to Fine Art Registry is a matter of public record. In April the company sued Ms. Franks; Fine Art Registry’s lead writer, David Phillips; and a Dalí specialist that the site quoted, Bruce Hochman, for defamation.

By phone, Mr. Scalglione also accused the Web site of “poisoning” his customers against him as retaliation for Park West’s not delivering business to Fine Art Registry by registering art works with them. Ms. Franks called this an “absolute, bald-faced lie,” adding, “I wouldn’t want their artwork tagged and registered with Fine Art Registry.”

For his part, Mr. Maldonado said he discovered Fine Art Registry “after doing lots of research on my own.” And Mrs. Vruble said she had not visited the Web site until this year: “We were already way hysterical before we heard of Fine Art Registry,” she said.

As for the Park West appraisals under scrutiny, Mr. Scaglione said the company determines values through a network of independent appraisers who “cross reference — they cross check.”

“We have literally spent hundreds of thousands of dollars doing this,” he said.

And he denied that the company promotes art to passengers as an investment. “We make no claim that somehow they’re going to go out and make money or they’re going to become instant millionaires,” he said.

Mr. Scaglione left a position teaching mechanical engineering at Wayne State University to open Park West as a gallery in Michigan in 1969. “My big early hit was Escher,” he said. “I caught him as he was very old, buying prints for $50, selling them easily for hundreds. I wound up handling the estate.” In 1993 he began selling art on cruise ships.

Because Park West is privately held, it does not issue revenue or earnings reports. But Mr. Scaglione said the company posted between $300 million and $400 million in annual revenue last year, with cruise-ship sales by 85 auctioneers accounting for roughly half that volume. The rest comes from gallery sales in Michigan and special events like hotel auctions, he said.

Asked about his financial arrangements with the cruise lines, he confirmed that they receive an undisclosed percentage of Park West revenue onboard. They are also guaranteed “a certain minimum against a percentage of the gross” that he compared to rent.

On the question of refunds, Mr. Scaglione said Park West considers refunds case by case. He would not disclose, he said, “the number or nature” of them except to say “there is never an admission of wrongdoing.”

The refunds do, however, typically come with confidentiality agreements, which Ms. Franks calls another Park West tactic intended to silence its critics and to make sure “nobody’s going to be able to walk into a lawyer’s office.” She denounced the defamation lawsuit against her and her colleagues in similar terms. “Park West has enough money to blot out the sun,” she said.

Consulting With Experts

Park West’s suit against Fine Art Registry revolves in part around the Web site’s allegations that the company’s Dalí prints are inauthentic. The suit quotes, for example, a Fine Art Registry interview in which Mr. Hochman said of the signatures on these pieces: “They’re all the same. And we feel they’re done with an auto pencil device.”

Mr. Scaglione called those assertions “bogus.” He cited the credentials of his Dalí appraiser, Bernard Ewell, and described his Dalí material as “perfectly” authenticated — “our documentation is sometimes five or six inches thick.”

When asked about the Dalí expert Mr. Field’s exclusion of certain “Divine Comedy” prints with pencil signatures, Mr. Scaglione said, “That man was so senile at the end of his life, it’s insane.” (Mr. Field died in 1998, two years after the catalog was published.)

Mr. Scaglione also dismissed Mr. Field’s “official” catalog as “the most unofficial thing you can imagine,” adding that there are “150 well-known fakes in that book” that are presented as authentic.

Frank Hunter, Mr. Field’s successor at the Salvador Dalí Archives in New York, countered indignantly in a telephone interview, “That is absurd,” adding with emphasis, “I’d like him to show me one.”

Despite the libel lawsuit, Ms. Franks has continued to investigate the authenticity of Park West’s Dalís. In May she traveled with her writer Mr. Phillips to Stuttgart, Germany, to meet Ernst Schöller, a senior art fraud detective with the Baden-Württemberg state police, who has been working to remove fake Dalís from the market there. They took for his inspection two of Dalí’s “Biblia Sacra” prints that they said were sold by Park West as hand-signed lithographs.

Mr. Schöller’s verdict, captured on video and in an article by Mr. Phillips, was that both works were photomechanical reproductions, not lithographs, and were not hand-signed by Dalí. He called them “poster art.”

Jessica Darraby, a Los Angeles lawyer who recently helped two clients secure refunds for art purchases at sea from a company she would not identify, said the cruise lines should take more responsibility for the onboard art sales.

“People are not watching their wallets like they would on Times Square,” she said. ‘They are lulled into this belief they are in a very safe place.”

A spokesman for Regent declined to comment on customers’ complaints against Park West. A spokesman for Royal Caribbean and Celebrity said that in the case of a dispute, they would work with Park West “to resolve the matter in a manner that is mutually agreeable to all parties involved.”

Neither company would disclose its financial arrangement with Park West; nor would Carnival, Norwegian, Oceania, Disney or Holland America.

The cruise-ship setting also poses a challenge for law enforcement. “There’s a steady stream of people who have complaints about how these art auctions are being handled on cruise ships,” said Don Hrycyk, a detective with the Los Angeles Police Department. But he said he could not investigate because international waters are well outside his territory.

“I usually refer these people to the F.B.I.,” he said.

In May an F.B.I. agent took part in a panel discussion in Los Angeles with Ms. Darraby, among others, about art fraud and forgery. Most of the session focused on purchases aboard cruise ships. Asked afterward by this reporter if the F.B.I. had opened an investigation into the cruise-ship sales, the agent, Christopher Calarco, said, “I can’t talk about current cases.”

Contacted by telephone and asked if the agency was investigating, an F.B.I. spokeswoman in Los Angeles said, “We don’t confirm or deny investigations.”

As for Mr. Maldonado, he hopes an investigation is under way. “Buying art from Park West,” he said, “was the only part of my cruise experience that was a bad experience.”

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